Cash was used for less than half of all retail transactions across the UK in 2015 according to the British Retail Consortium’s (BRC) annual payments survey, published this week. The report looks at the methods of payment UK shoppers are using when buying goods in store and online, how this differs from previous years and the average cost to the retailer for handling each method of payment.
The use of cash has fallen almost five per cent down to 47.15% of all retail transactions in 2015 from 52.09% the previous year. This is the largest percentage point drop for five years and means that almost 20% fewer transactions are made with cash than in 2011, according to the BRC.
BRC director of Business and Regulation, Tom Ironside, said: "Though the use of cash has been in decline for some time now, this year it has seen a significant dip. Crucially, retailers are seeing cash used in less than half of all transactions for the first time, marking a real watershed in the payments landscape. However, cash remains an important payment method for many customers and will be with us for years to come.
"It seems that more of us are turning to our debit cards to make payments especially as new contactless technology is proving incredibly popular for those lower-value transactions that used to be the mainstay for cash. This change has been made possible by retailers investing heavily in new payments technology making it easier and quicker for customers to securely complete transactions in store. Card issuers are also driving this change in customer behaviour with around 55% of cards currently in use now featuring contactless technology."
The BRC also found the cost of handling debit and credit card transactions for those retailers participating in the survey has reduced by around £159 million. These savings were due to early changes made available to some retailers by debit and credit card schemes in advance of the implementation of the new Interchange Fee Regulation. The full impact of the changes under the regulation should be experienced by all retailers from 2016.
Ironside concluded: "The BRC has been campaigning for more than 10 years to better regulate the cost of handling debit and credit card payments. We are, therefore, delighted that all retailers will shortly feel the benefits of the Interchange Fee Regulation. It is a shame that some smaller retailers weren’t able to benefit from changes made in advance of the regulation coming into force, further evidence perhaps of the necessity for better regulation in this area."